We’ve varied estimates of the “tax gap” out there. Roughly speaking that gap is the difference between what the law says should be collected in taxation and what actually is collected. HMRC thinks about £35 billion, calls from the wilder shores of loondom say £120 billion. The thing is, we can actually construct an argument that the gap is negative, that HMRC collects more than it ought to.
This is, admittedly, difficult with the HMRC figure, although it’s quite obviously too high as an estimate:
Three of Britain’s biggest supermarket groups have won a legal victory worth up to £500m, following a court battle over business rates on cash machines installed at their shops.
The court of appeal ruled on Friday that cash machines located both inside and outside stores should not be liable for additional business rates, which are a form of property tax on businesses collected by the government.
Several retailers including Tesco, Sainsbury’s and the Co-op had fought in the courts against the tax rules set by the Valuation Office Agency – the arm of HM Revenue and Customs responsible for setting business rates – which had claimed that ATMs should be additionally assessed.
The court verdict means the supermarket chains are in line for a multimillion pound windfall from tax refunds, which the property advisory company Colliers estimates is worth about £500m.
The case dates back to a 2013 decision by the government to charge rates on “hole-in-the-wall” cash machines, which was backdated to 2010.
That is not the negative of tax avoidance, that’s the negative of tax evasion. HMRC has been collecting tax which is not legal to collect - that is the opposite of not paying tax which is legally due, tax evasion. Sadly, our system is asymmetrical, no one will be threatened with jail over this.
Still, including what HMRC does collect but shouldn’t - not something included in anyones’ estimates - will close that tax gap, won’t it?
Once we look at those wilder claims, that £120 billion say, then it’s trivial to show that the gap is negative. For the larger sum includes what the calculator thinks should be taxed but which the law doesn’t. We differ with those calculations, insisting that large number of things which the law says should be taxed should not be. Thus the gap is negative, HMRC collects more revenue than we think just or righteous.
Yes, yes, what fun etc. But it is still true that we have the opposite of tax evasion, the collection of taxes which are not legally due, something that really should be in the figures.